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CITY OF SAN BERNARDINO - REQUEST FOR COUNCIL ACTION
From: Barbara Pachon
Director of Finance
ORJ GJNAL Subject:
Resolution of the Mayor and Council
authorizing the execution of an
Agreement between the City and the
auditing firm of Rogers, Anderson
Malody & Scott CPA's, LLP for the
provision of financial auditing services
Dept: Finance
Date: June 19, 2006
Synopsis of Previous Council action:
NONE
Recommended motion:
Adopt Resolution
~~rJU
s(gnature
Contact person: Barbara Pachon, Director of Finance
Phone:
ext. 5242
Supporting data attached:
Yes
Ward:
FUNDING REQUIREMENTS: Amount: $55,200
Source: (Acct. No.) 001-092-5502
(Acct. Description)
Finance:
Council Notes:
R €SD . ;) () 0 ftJ - .;).'-/ ()
Agenda Item No. J.. 0
7/1 O/D lo
CITY OF SAN BERNARDINO - REQUEST FOR COUNCIL ACTION
STAFF REPORT
SUBJECT
Resolution of the Mayor and Common Council authorizing an agreement between the City of San
Bernardino and the auditing firm of Rogers, Anderson, Malody & Scott CP As LLP for the
provision of financial auditing services.
BACKGROUND
On April 13, 2006, the City of San Bernardino, the Economic Development Agency and the
Municipal Water Department issued Request for proposals (RFP) F-06-21 for the provision of
auditing services. Because the regulations regarding governmental accounting are specialized and
change often, it is important to go through the RFP process periodically to ensure the City is
getting the most advantageous independent audit services available. The Water Department and
EDA joined the City in the RFP process in an effort to streamline the audit process and reduce
audit costs.
The request for proposal required separate audits and financial statements for each of the three
agencies (component units) and the comprehensive annual financial report (CAFR) encompassing
all three agencies. These reports are required in accordance with governmental accounting
standards established by the Governmental Accounting Standards Board (GASB).
Thirteen notices of request for proposal were sent to qualified CPA firms as well as being posted
on the City's web site and provided to the Chamber of Commerce. There were only two responses
and one firm declined to bid based on staff limitations. The two responding firms were Mayer
Hoffinan McCann P.c. and Rogers, Anderson Malody & Scott (RAMS) CP As of San Bernardino.
RAMS was the City's auditors from 1993 to 1999.
On May II, accounting staff from the City, EDA and Water met to evaluate the proposals. Based
on familiarity with each of the two responding firms, staff concluded that interviews with the
responding firms would not add significantly to the evaluation process. The evaluation criteria
stated in the RFP were reviewed for each of the responding firms. In the areas of understanding of
work scope, demonstrated skills and credentials, related experience and reverences, quality of the
RFP response and approach to performing the audit, both firms were considered adequate. The
concern of using one firm for an extended period of time was raised during the last extension of
the audit contract. The appearance of independence and the alteration in emphasis of audit
procedures led to the decision to recommend a change in audit firms at this time. Based on these
considerations as well as their experience and qualifications, it was determined that Rogers,
Anderson, Malody & Scott CP As LLP be recommended for a three year audit contract, for the City
and EDA. The Water Department has decided to go with Mayor Hoffman McCann P.c.
FINANCIAL IMPACT
The City of San Bernardino's portion of the joint audit, for the first year of services, which
includes out of pocket expenses, is $55,200 with a 3% increase for each subsequent year
thereafter. Funding for audit services has been included in the FY 2006-07 General Government
budget for professional/contractual services (001-092-5502).
RECOMMENDATION
That the Mayor and Common Council adopt the resolution authorizing the execution of an
agreement by and between the City of San Bernardino and the auditing firm of Rogers, Anderson,
Malody & Scott CPAs, LLP.
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RESOLUTION NO.
RESOLUTION OF THE MAYOR AND COMMON COUNCIL OF THE CITY OF
SAN BERNARDINO AUTHORIZING THE EXECUTION OF AN AGREEMENT
BETWEEN THE CITY OF SAN BERNARDINO AND ROGERS ANDERSON MALODY
AND SCOTT L.L.P. FOR THE PROVISION OF FINANCIAL AUDITING SERVICES.
BE IT RESOLVED BY THE MAYOR AND COMMON COUNCIL OF THE CITY
OF SAN BERNARDINO AS FOLLOWS:
SECTION I. The Mayor is hereby authorized and directed to execute on behalf of said
City an agreement with Rogers Anderson Malody and Scott L.L.P. relating to financial
auditing services, a copy of which is attached hereto as Exhibit "A" and incorporated herein by
reference. Upon execution of said agreement, the Purchasing Manager of the City of San
Bernardino is directed to issue a Purchase Order to Rogers Anderson Malody and Scott in the
amount not to exceed $55,200 for FY 06-07; $56,900 for FY 07-08, and $58,600 for FY 08-09.
SECTION 2. The authorization to execute the above referenced agreement is rescinded
if the parties to the agreement fail to execute it within sixty (60) days of the passage of this
resolution.
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RESOLUTION OF THE MAYOR AND COMMON COUNCIL OF THE CITY OF
SAN BERNARDINO AUTHORIZING THE EXECUTION OF AN AGREEMENT
BETWEEN THE CITY OF SAN BERNARDINO AND ROGERS ANDERSON MALODY
AND SCOTT L.L.P. FOR THE PROVISION OF FINANCIAL SERVICES.
I HEREBY CERTIFY that the foregoing Resolution was duly adopted by the Mayor
and Common Council of the City of San Bernardino at an
meeting thereof, held
day of
, 2006, by the following vote, to wit:
on the
Council Members:
AYES
NAYS
ABSTAIN
ABSENT
ESTRADA
BAXTER
MCGINNIS
DERRY
KELLEY
JOHNSON
MCCAMMACK
Rachel G. Clark, City Clerk
day of
The foregoing resolution is hereby approved this
2006.
Patrick J. Morris, Mayor
City of San Bernardino
Approved as to Form
JAMES F. PENMAN,
City Attorney
Byf- r J......
AGREEMENT FOR AUDlTING SERVICES
This Agreement for Auditing Services is made and entered into on this day of June,
2006 by and between the City of San Bernardino, a municipal corporation (hereinafter
referred to as "CITY") and Rogers, Anderson, Malody and Scott, L.L.P., Certified Public
Accountants (hereinafter referred to as "AUDITORS").
WITNESSETH
WHEREAS, AUDITORS are recognized as competent and qualified certified public
accountants who were selected by the CITY through competitive procedures, and are duly
authorized to practice and licensed as such by the California State Board of Accountancy;
NOW, THEREFORE, in consideration of their mutual promises, obligations and covenants
hereinafter contained, the parties hereto agree as follows:
I. TERM. Unless terminated earlier or cancelled as provided for herein, the term of this
Agreement shall be for the each of the fiscal year ending June 30, 2007 through 2009.
2. SCOPE OF SERVICES. The AUDITORS agree to provide services and perform all work
necessary in a manner satisfactory to the CITY as set forth in the proposal, the request for
proposal (RFP) for audit services dated 4/13/2006, and AUDITOR'S proposal dated May
4, 2006. These documents are attached hereto and by reference incorporated herein and
made a part hereof.
3. CITY'S OBLIGATIONS. For furnishing services specified in this Agreement, CITY will
pay and the AUDITORS shall receive the full compensation as set forth in the proposal
attached hereto and by reference incorporated herein and made a part hereof.
Additionally, CITY agrees to provide AUDITORS with supporting schedules, trial
balances and reconciliations as necessary to complete the services requested.
4. PAYMENT SCHEDULE. The AUDITORS shall submit a monthly billing based on the
percentage of audit work completed. After approval of the CITY'S Director of Finance,
said invoice shall be paid within 30 days.
5. COMPLETION OF AUDIT AND DELIVERY OF AUDIT OPINIONS.
A. AUDITORS shall complete all work by the dates provided in the request for proposal
of each fiscal year included in the term of this Agreement.
B. AUDITORS shall deliver their final typed audit opinions and other reports as set forth
in the proposal for each fiscal year included in the term of this Agreement provided
CITY furnishes the information to AUDITORS pursuant to the request for proposal in
a timely manner.
6. TERMINATION.
A. Termination Without Cause. CITY and AUDITORS shall have the right to terminate
this Agreement, by giving not less than thirty (30) days written notice of termination
to the other party. On the date of termination stated in the written notice, AUDITORS
shall discontinue performance of the services, preserve the product of the services, and
turn over to CITY the product of the services in accordance with written instructions
of CITY. If CITY terminates the Agreement under this Subsection A of Section 6,
CITY shall compensate AUDITORS within thirty (30) days following the effective
date of termination a fee for all services satisfactorily provided prior to the effective
date of termination based on the amounts and rates set forth in the proposal. If
AUDITORS terminate the Agreement under this Subsection A of Section 6, CITY
shall compensate AUDITORS in the same amount CITY would compensate
AUDITORS in the event CITY terminated the agreement under this Subsection A of
Section 6, less any costs CITY pays other auditors to review or re-perform the services
provided by AUDITORS prior to the date of termination. In the event of termination
without cause by eithe party, CITY's payment as provided herein shall constitute full
satisfaction of CITY's obligations under this Agreement.
B. Termination bv CITY for Cause.
I. CITY may, by written notice to AUDITORS, immediately terminate the whole
or any part ofthis Agreement in any of the following circumstances:
a. AUDITORS fail to perform the services required by this Agreement
within the time specified herein, or within any extension ofthat time;
b. AUDITORS fail to perform satisfactorily the services called for by this
Agreement, or otherwise breaches any provision of this Agreement, and
do not correct such failure within a period of ten (10) days or such
longer period as CITY may authorize in writing after notice is given by
CITY specifying such failure of breach; or
c. AUDITORS make a general assignment for the benefit of their
creditors, files or have filed against them a petition in bankruptcy, or
have a receiver appointed on account oftheir insolvency.
d. AUDITORS fail to maintain the insurance required pursuant to Section
10.
2. Immediately upon receiving written notice of termination, AUDITORS shall
discontinue performing services, preserve the product of the services, and turn
over to the City the product of the services in accordance with written
instructions of CITY. In the event CITY terminates this Agreement in whole
or in part as provided above in Paragraph 1 of this Subsection B of Section 6,
CITY shall pay AUDITORS a fee for all services satisfactorily provided by
AUDITORS prior to the effective date of termination based on the amounts
and rates set forth in the proposal, less any fees CITY pays other auditors to
review or re-perform the services provided by AUDITORS prior to the date of
termination. Said payment shall constitute full satisfaction of City's
obligations under this Agreement.
C. Termination bv AUDITORS for Cause. AUDITORS may immediately terminate this
Agreement if CITY is in breach of the Agreement and does not correct such breach
within a period often (10) days (or such longer period as AUDITORS may authorize
in writing) after notice is given by AUDITORS specifying such failure of breach. If
AUDITORS terminate the Agreement pursuant to this Subsection C of Section 6,
CITY shall compensate AUDITORS within thirty (30) days following the effective
date of termination a fee for all services satisfactorily provided prior to the effective
date of termination based on the amounts and rates set forth in Appendix B, and such
payment shall constitute full satisfaction of CITY's obligations under this Agreement.
7. NOT OBLIGATION TO THIRD PARTIES. The CITY shall not be obligated or liable
hereunder to any party other than the AUDITORS.
8. PROHIBITION AGAINST SUBCONTRACTING OR ASSIGNMENT. The experience,
knowledge, capability and reputation of AUDITORS, its principals and employees were a
substantial inducement for the CITY to enter into this Agreement. Therefore AUDITORS
shall not contract with any other entity to perform in whole or in part the services required
hereunder without the express written approval of the CITY. In addition, neither this
Agreement nor any interest herein may be transferred, assigned, conveyed, hypothecated
or encumbered voluntarily or by operation of law, whether for the benefit of creditors or
otherwise, without the prior written approval of CITY. Transfers restricted hereunder
shall include the transfer to any person or group of persons acting in concert of more than
twenty-five percent (25%) of the present ownership and/or control of AUDITORS, taking
all transfers into account on a cumulative basis. In the event of any such unapproved
transfer, including in any bankruptcy proceeding this Agreement shall be void. No
approved transfer shall release any surety of AUDITORS of any liability hereunder
without the express consent of CITY.
9. INDEPENDENT CONSULTANT. Ncither the CITY nor any of its employees shall have
any control over the manner, mode or means by which the AUDITORS, its agents or
employees perform the services required herein, except as otherwise set forth. The CITY
shall have no voice in the selection, discharge, supervision or control of AUDITORS'
employees, servants, representatives or agents, or in fixing their number, compensation or
hours of service. AUDITORS agree to maintain continuity of managerial personnel
assigned to the engagement except for reasons beyond AUDITORS' control. AUDITORS
shall perform all services required herein as an independent contractor of CITY and shall
remain at all times to the CITY a wholly independent consultant with only such
obligations as are consistent with that role. AUDITORS shall not at any time or in any
manner represent that it or any of its agents or employees are agents or employees of
CITY. CITY shall not in any way or for any purpose become or be deemed to be a
partner of AUDITORS in its business or otherwise of a joint venture or a member of any
joint enterprise with AUDITORS.
10. INSURANCE. The AUDITORS shall procure and maintain, at its cost, comprehensive
general liability and property damage insurance, including automobile and excess liability
insurance, against all claims for injuries against persons or damages to property resulting
from AUDITORS' negligent acts or omissions rising out of or related to AUDITORS'
performance under this Agreement. AUDITORS shall also carry Workers' Compensation
Insurance in accordance with State Workers' Compensation laws. Said Workers'
Compensation Insurance shall be through its business services firm Conrad Business
Services, Inc. AUDITORS agree to maintain professional liability insurance to protect
CITY from AUDITORS' negligent acts, errors or omissions of a professional nature. If
any claim related tot he performance hereunder be asserted against either party hereto, the
party claimed against shall receive all reasonable assistance from the other. The
requirements herein for subrogation may be waived by the CITY with respect to such
professional liability insurance.
The insurance required hereunder shall be kept in effect during the term of this Agreement
and shall not be subject to reduction in coverage below the limits established herein nor
cancellation or termination without thirty (30) days prior written notice by registered letter
to the CITY. The insurer shall waive the right of subrogation against CITY, its officers,
employees and agents, and the coverage shall be primary for losses arising out of
AUDITORS' performance hereunder and neither the CITY nor its insurers shall be
required to contribute to any such loss. A certificate evidencing the foregoing and naming
the CITY as an additional insured shall be delivered to and approved by the CITY prior to
commencement of the services hereunder. The procuring of such insurance or the
delivery of policies or certificates evidencing the same shall not be construed as a
limitation of AUDITORS' obligation to indemnify the CITY, its officials and employees.
The amount of insurance required hereunder shall be as follows:
1. Workers Compensation to statutory limits;
2. Commercial General Liability:
Each occurrence $ 1,000,000
Personal injury $1,000,000
Aggrcgate limit $2,000,000
3. Hired Auto and Non-Owned Auto Liability:
Each occurrence $1,000,000
Aggregate limit $ I ,000,000
4. Professional Liability:
Each claim and in the aggregate $ I ,000,000
11. PREVAILING PARTY. If any court action occurs as a result of a dispute between the
parties concerning any element of this agreement, the prevailing party shall be entitled to
reasonable attorney's fees. The costs, salary and expenses of the City Attorney and
members of his office in enforcing this agreement on behalf of the City shall be
considered as "attorney's fees" for the purpose of this paragraph.
12. NOTICE. All written notices to the parties hereto shall be sent by United States mail,
postage prepaid by registered or certified mail addressed as follows:
CITY:
Barbara Pachon, Finance Director
City of San Bernardino
300 North "D" Street 6th Floor
,
San Bernardino CA 92418
AUDITORS:
Terry P. Shea, Partner
Rogers Anderson Malody & Scott L.L.P.
290 N "D" Street, Suite 300
San Bernardino CA 9240 I
13. AUTHORITY TO EXECUTE AGREEMENT. Both CITY and AUDITORS do
covenant that each individual executing this Agreement on behalf of each party is a
person duly authorized and empowered to execute agreements for such party.
IN WITNESS WHEREFORE, the parties hereto have caused this instrument to be executed
the day and year first written above.
THE CITY OF SAN BERNARDINO
By:
Patrick J. Morris, Mayor
ATTEST:
City Clerk
APPROVED AS TO FORM:
ROGERS ANDERSON MALODY &
SCOTT
Terry P. Shea, Partner
** FOR OFFICE USE ONLY - NOT A PUBLIC DOCUMENT **
RESOLUTION AGENDA ITEM TRACKING FORM
Meeting Date (Date Adopted): 7 hd I f)t fl !ten; # :.lC)
Vote: Ayes I J..'/9'f~7Nays----.:&
) J ..,-
Change to motion to amend original documents D
Resolution # )0010 - 2-LJ (J
'tV Absent ~
Abstain
Companion Resolutions
Null/Void After: i., 0 days/ ~
Resolution # On Attachment~ Note on Resolution of attachment stored separately: D
PUBLISH D POST D RECORD W/COUNTY D By:
Date Sent to Mayor:
Date of Mayor's Signature:
Date ofClerk/CDC Signature:
Date MemolLetter Sent for Signature:
I" Reminder Letter Sent:
7- /fl- Din
znd Reminder Letter Sent:
Reso. Log Updated: ~
Seal Impressed: ~
Reso. # on Staff Report ~
Date Returned:
'7 -,;10- {.0 Not Returned: D
Request for Council Action & Staff Report Attached:
Updated Prior Resolutions (Other Than Below):
Updated CITY Personnel Folders (6413, 6429, 6433, 10584, 10585, 12634):
Updated CDC Personnel Folders (5557):
Updated Traffic Folders (3985, 8234, 655, 92-389):
Yes~ No By_
Yes No+ By_
Yes No+-- By_
Yes No~ By_
Yes No 5( By_
Copies Distributed to:
Animal Control D EDA
City Administrator D Facilities
City Attorney Ja-~ 1\ R.- Finance
Code Compliance D Fire Department
Development Services D Human Resources
Others:
D Information Services D
D . Parks & Recreation D
~VeJLOv'vC(~lice Department D
D Public Services D
D Water Department D
Notes:
Ready to File: _
Date:
Revised 1Z/18/03
\ .' '.
CITY OF SAN BERNARDINO
Interoffice Memorandum
CITY CLERK'S OFFICE
Records and Information Management (RIM) Program
DATE:
July 18, 2006
TO:
Gary Silvius, Accounting Manager
Finance Department
FROM:
Sandra Medina, Assistant to the City Clerk
RE:
Transmitting Documents for Signature - Resolution No. 2006-240
At the Mayor and Common Council meeting of July 10, 2006, the City of San Bernardino
adopted Resolution No. 2006-240 - Resolution authorizing the execution of an agreement
between the City of San Bernardino and Rogers Anderson Malody and Scott L.L.P. for the
provision of financial auditing services,
Attached are one (1) original agreement and two (2) duplicate original agreements. Please obtain
signatures in the appropriate locations and forward the original agreement to the City Clerk's
Office as soon as possible, to the attention of Dodie Otterbein, Records Management
Coordinator. Please retain a duplicate fully executed agreement for your records and forward a
fully executed copy to the other party.
Please be advised that the contract will be null and void if not executed within sixty (60)
days, or by Friday, September 8, 2006.
If you have any questions, please do not hesitate to contact Dodie Otterbein at ex!. 3215. Thank
you.
Sandra Medina
Assistant to the City Clerk
Signed:
Date:
Please sign and return